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ABSTRACT
The research topic is “The factors affecting debts collection in financial institutions
A case study of NMB Kenyatta Road Branch, Mwanza”. The research objectives on this
study were to identify the factors affecting debts collection in Kenyatta road branch,
Mwanza being my general objective and the following being my specific objective. To
examine techniques used in managing debts, to examine the procedures used by NMB to
collect debts, to evaluate whether NMB collateral condition are favorable or otherwise
and to examine whether the interest rate charged is fair to their customer. The study
includes the use of questionnaires; and these were used to communicate between researcher
and respondent, observation (participatory) was used and interview (structured) were used
to gather data from primary data. NMB’s loan report and written documents were also used
as secondary data sources. The researcher found the following key findings. Diversion of
fund, poor collateral, economic reasons, high interest rate, as the factors affecting debts
collection problems. The research concludes by noting that there are factors affecting debts
collection in financial institutions which are: high interest rate, strictly means and
techniques, diversion of funds, poor collateral, poor handling of debts when one of the
customer moves, and lack of cooperation between financial institutions, and inadequate
auditing standard. The researcher recommends that: The management should establish
more controls over debts in order to reduce the risk of unpaid debts by lowering their
interest rate to their customers so that they can be able to repay their debts. More training is
still needed to customers and loan department staffs so as to improve the quality of debts.
New method of debts collection like personal visit is more needed rather than letters and
faxes. |
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